Airline Stocks Soar on Traveller Numbers: Is the Rise Sustainable?

question marks written reminders tickets

This week started with renewed optimism for airline stocks after last week’s dips on weak earnings. Stocks of the top four U.S. airlines and Air Canada (TSX:AC) surged above 2% in the early trading session today as the Transportation Security Administration (TSA) data showed an uptick in travellers. This brought some relief to the airline stocks after the last week’s red line. Last week United Airlines (NASDAQ:UAL) and Delta Air Lines (NYSE:DAL) reported billions of dollars in third-quarter losses.

Airlines see a surge in traveller numbers 

Airlines worldwide have been growing desperate to fly after the COVID-19 pandemic reduced air travel by 95%. Only cargo and essential travel were allowed. The total number of people that went through TSA checkpoints dropped 96% year over year (YoY) to as low as 87,500. As the economy re-opened in July, domestic air travel saw an uptick, while international travel was still low.

But on October 18, the number of people that went through TSA checkpoints passed the 1 million mark for the first time since March 15. This represents a 60% decline from last year, but on the bright side shows a 35% recovery in travel demand. The fact that people are gradually flying again gives some assurance that the already delayed travel demand is finally returning.

What do these traveler numbers mean to airlines?

Airlines have been burning cash over the last six months as they were not allowed to fly. When they got permission, there weren’t enough passengers. Air Canada had to cancel and merge hundreds of flights in September as it was unable to fill the seats. It was operating at less than 20% capacity, burning $15-$17 million cash daily, despite the government’s wage subsidy and low oil prices. AC is on the verge of reporting a loss of $4 billion in the first nine months of 2020.

United and Delta have already reported more than $5 billion in losses so far this year. In the third quarter, they operated at 25% capacity reporting more than 75% YoY decline in revenue. But a YoY figure will only be negative. As airlines are in a recovery phase, revenue of United and Delta surged 70% and 110% sequentially. And a 1 million traveler throughput reassured investors that this sequential revenue growth is here to stay.

Hence, airline stocks surged on TSA figures. Airlines have a long way before they even become profitable. But the 1 million traveler number indicates that the first step towards recovery has begun.

Airlines have a long road to sustainable recovery

There are many roadblocks before airlines can show sustainable recovery. Hence, don’t be surprised if their stocks drop once again when American Airlines and Southwest Airlines report their third-quarter earnings on October 22.

Once the international borders open and people return to flying, airlines’ cash burn will slow. The top five North American airlines were burning between $15-$40 million cash daily in the second quarter. They are already doing everything possible to cut costs. Lower cost and higher travel demand will mitigate their losses.

The next elephant in the room will be the expensive debt they took to increase their liquidity this year. The capital is slowly drying up for airlines, and their poor credit ratings aren’t helping. Hence, when AC succeeded in refinancing $1.5 billion in short-term debt and also keep the Transat AT acquisition going at a 75% reduced price, shareholders were happy.

The airlines which fail to generate enough revenue to repay the maturing debts could risk bankruptcy.

What should investors do?

The billionaire investor Warren Buffett exited airline stocks as he saw no value in them for the next few years. For him, staying invested in these stocks was equivalent to funding losses. If you are looking at airlines from a long-term perspective, I would suggest you look into other stocks that are still churning profits. The entire industry would take at least three years to stabilize. By then, only the major airlines with better liquidity would survive. Many would fall prey to bankruptcy.

It’s hard to tell which side AC will land. Wait until its earnings release on November 3, and then take advantage of the stock’s $14-$20 price range to make some short-term gains.

Forget Air Canada? Here are some good stocks to buy in October.

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Fool contributor Puja Tayal has no position in any of the stocks mentioned. The Motley Fool recommends Delta Air Lines and Southwest Airlines.

The post Airline Stocks Soar on Traveller Numbers: Is the Rise Sustainable? appeared first on The Motley Fool Canada.

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The Manifestation Sigil Review

You have the power to choose how you live but you have to train your mind for it. Unlimited abundance awaits you and it is just waiting for you to welcome it. Read on to know how to have the abundance that you wanted ever since. What is The Manifestation Sigil? The Manifestation Sigil is…

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CRB Update: Create a Passive Income Stream for LIFE!

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The Canada Emergency Response Benefit (CERB) might be gone, but Canadians needing extra income still have options. Today, those options are a bit more focused. The one most popular with Canadians today is the Canada Recovery Benefit (CRB).

The CRB update applies to Canadians who are employed and self-employed but are not entitled to Employment Insurance (EI) benefits. The support is given to those directly affected by COVID-19, and is administered by the Canada Revenue Agency (CRA).

If eligible, Canadians can receive $1,000 ($900 after tax) for two weeks. Then, if you are still in the situation you were in before, you can apply for a further two weeks. You can do this up to a total of 13 times, or 26 weeks, for a total of $13,000, or $11,700 after tax.

Unfortunately, $11,700 certainly isn’t enough to live on for the year. This is just meant to create some supplemental income while you recover. However, if you’re able to take the CRB update money and put it in a Tax-Free Savings Account (TFSA) while you get better, there’s a great option to consider.

Passive income

Using the CRB update to create passive income isn’t gaming the system. You are eligible for this money because you are affected by the pandemic, just like everyone else. And let’s say you get past those 26 weeks and your situation still hasn’t changed. You’re going to want to have some savings set aside, along with a passive income stream to keep you afloat.

So here’s what I recommend. If you’re able, create a budget with the funds you’ll receive from the CRB update and put that cash aside from each payment. Then, whatever you’re able to put aside, put that in the TFSA. All you have to do is find a solid dividend stock that can create a passive income stream.

And it doesn’t merely have to apply during COVID-19. No, instead you could be setting your investments up for life! This CRB update could be the start of creating passive income that will follow you everywhere.

A safe bet

If you’re asking for the CRB update, you need that money. So if you’re able to invest any of it, you’ll want to keep it safe. The railway industry is one of the safest options out there. No matter what, the railways keeping running. If one industry is affected by the pandemic, there are other industries still running that can keep trains running along with them. So you don’t have to worry about this industry going belly up.

An excellent example is Canadian National Railway Co. (TSX:CNR)(NYSE:CNI). This company continues to do well even during the pandemic, with shares reaching a five-year return of 106% as of writing, and a 10-year compound annual growth rate (CAGR) of 17.89%! Meanwhile, its 1.57% dividend yield has grown a CAGR of 15.6% in the last decade.

If you were able to put the whole $11,700 aside in CNR, you would be looking at passive income of $184 as of writing. Not much, but if you keep adding to it there is no limit to the kind of passive income you can create! All from one CRB update.

Now that you have some cash coming in, buy up big with this stock!

This Tiny TSX Stock Could Be the Next Shopify

One little-known Canadian IPO has doubled in value in a matter of months, and renowned Canadian stock picker Iain Butler sees a potential millionaire-maker in waiting…
Because he thinks this fast-growing company looks a lot like Shopify, a stock Iain officially recommended 3 years ago – before it skyrocketed by 1,211%!
Iain and his team just published a detailed report on this tiny TSX stock. Find out how you can access the NEXT Shopify today!

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Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. David Gardner owns shares of Canadian National Railway. The Motley Fool owns shares of and recommends Canadian National Railway. The Motley Fool recommends Canadian National Railway.

The post CRB Update: Create a Passive Income Stream for LIFE! appeared first on The Motley Fool Canada.

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Cineplex (TSX:CGX) Stock Plummets 29% in 1 Day: Buy or Sell?

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Theatre operators can kiss profits from film exhibitions goodbye in 2020. Cinema operations are back, although capacity in theatres is limited in compliance with public health guidelines. Canada’s Cineplex (TSX:CGX) hopes moviegoers will return in droves with the reopening of its 164 theatres across the country.

Unfortunately, the road ahead is fraught with uncertainties. Odds are stacking up against the nation’s iconic theatre operator. The situation is beyond control. On October 5, 2020, Cineplex shares tanked 29% from $6.69 to $4.75. A James Bond film could have contributed to the stock’s sharp one-day plunge.

Canadian pastime

In the last week of September 2020, Cineplex heralded the return of over 1.5 million guests since Canada Day. The company boasted selling almost 60,000 hot dogs and more than 460 million kernels of popcorn. It was time to seize the moment with the coast-to-coast reopening of its theatre and entertainment venues.

Dan McGrath, Cineplex’s CEO, said Canadians miss their pastime — watching movies on the giant screen. The cinematic experience is incomparable when watching a film in UltraAVX, IMAX, D-BOX, and 4DX. Movie lovers should be excited about upcoming films such as Wonder Woman 1984 and Black Widow.

However, a potential blockbuster next month will not be shown. Instead of a November 2020 release, MGM Pictures is pushing back the playdate of  the James Bond film No Time to Die to April 2021. It’s the fifth movie of actor Daniel Craig as the lead character.

Magic is gone

In Q2 2020 (quarter ended June 30, 2020), all Cineplex theatres and entertainment venues were closed. The company generated $3.3 million in revenues from home delivery food services. On the digital commerce side, registered users in the Cineplex Store climbed 47% versus the same period in 2019. Device activation soared by 120%.

For the first half of 2020, total revenues dropped 62% (from $803.5 million to $304.8 million) compared to the first half of 2019. Cineplex’s net loss was $277.3 million versus the $12 million profit last year. Regaining the pre-coronavirus theatre occupancy level is doubtful in the near term.

Shutdowns are back

Startling news came out from Toronto last week. Public health experts recommended that the province close cinemas, casinos, conference venues, gyms, fitness centres, and cinemas. It includes a ban on indoor service at restaurants, bars, and nightclubs.

The implementation of a modified form of stage-two lockdown in Toronto is another black to Cineplex. CEO McGrath tweeted his disappointment saying the forced closures of theatres are excessive. Aside from Toronto, the hot spots with rising COVID-19 cases are Ottawa and Peel. One Cineplex employee at the Varsity Cinemas in the Manulife Centre has tested positive for COVID-19.

Bad script

Box office accounts for almost 75% of Cineplex’s revenues. With only 25% seating capacity in 1,687 screens and a shortage of Hollywood flicks, the company will continue to bleed cash.

The stock is incredibly cheap at $4.63, but if it’s down 86% year to date, there’s no attraction to consider investing in Cineplex. Management might need to change the script and create a new business model. Movie streaming at home is a safer alternative.

Speaking of Cineplex stock that plunged 29% in one day…

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Fool contributor Christopher Liew has no position in any of the stocks mentioned.

The post Cineplex (TSX:CGX) Stock Plummets 29% in 1 Day: Buy or Sell? appeared first on The Motley Fool Canada.

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Pinnacle Financial Partners $200 Checking Bonus (TN)

Pinnacle Financial PartnersFind the latest Pinnacle Financial Partners promotions, bonuses, and offers here.

Right now, they are offering a $200 gift card for Titans or Grizzlies fans when you open a checking account!

About Pinnacle Financial Partners Promotions

Pinnacle Financial Partners was founded on February 20, 2000, by twelve Nashville businessmen who wished to create a locally owned financial firm. Their vision is to be the best financial services firm and the best place to work in the Southeast. With that, you can check out some great bank bonuses, CD rates, and bank rates at Pinnacle Financial Partners.

  • Availability: TN (Bank Locator)
  • Routing Number: 064008637
  • Customer Service: 800.264.3613

We will review the current Pinnacle Financial Partners promotions below.

Bank Offers You May Like
See our best bank bonuses updated daily to earn up to $1,000 in free money. Find popular checking offers such as Chase Bank, HSBC Bank, TD Bank, Huntington Bank, BBVA, Discover Bank, and CIT Bank. See our best rates for Savings and CD too.
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Pinnacle Financial Partners $200 Grizzlies Gift Card

Earn a $200 bonus with a new Checking Account.

If you are a Memphis Grizzlies fan, you can earn a $200 Grizzlies Gift Card with a new Checking Account and meeting all the qualifications.

  • Account Type: Grizzlies Basic Checking, Grizzlies Plus Checking, or Grizzlies Premium Checking
  • Availability: TN (Bank Locator)
  • Credit Inquiry: Soft Pull
  • ChexSystems: Yes
  • Opening Deposit: $100 minimum
  • Credit Card Funding: Unknown. Let us know.
  • Direct Deposit Requirement: Yes
  • Monthly Fee: $3- $15, see how to avoid monthly fees below.
  • Closing Account Fee: Account must be maintained in good standing for the first 90 days

(Expires November 30, 2020)

Additionally, you may want to compare this offer to a Chase Total Checking ($200 Bonus), HSBC Premier Checking ($450 Bonus), Huntington 25 Checking ($500 Bonus), TD Bank Beyond Checking ($300 Bonus).

How To Earn $200 Gift Card Promotion

  • Open an account online or visit one of our locations.
  • Make a minimum deposit of $100.
  • Set up a recurring direct deposit of your full payroll (or gov’t benefits) to your new account. One recurring direct deposit must post and clear your account by November 30, 2020.
  • Free online and mobile banking (with iPhone and Android apps)
  • Free Grizzlies debit card with no usage fees
  • All consumer debit cards are available on Apple Pay and Samsung Pay
  • Basic Checking: $3, waive by signing up for eStatements
  • Plus Checking: $8, waive by maintaining $1,000 minimum balance
  • Premium Checking: $15, waive by maintaining $5,000 minimum balance
  • This offer is for new Pinnacle checking households, or for households that have not had an open Pinnacle consumer checking account for at least 24 months.
  • Limit one bonus per household.
  • Cannot be combined with other offers.
  • Must be 18 or older at the time of account opening.
  • The offer is non-transferable.
  • The account is subject to approval.

Bottom Line

If you are a fan of the Titans or Grizzlies, this is a unique promotion where you can receive some free merchandise to show your love for the team. Just make a minimum opening deposit of $100 and have at least one recurring direct deposit post and you can start a new banking experience!

Feel free to comment below and let us know about how it went. We value your feedback and will continue to keep you posted on the latest bank offers nationwide.

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Chase Private Client $2,000 Cash Review
Chase Business Checking Account $300 Cash Review
Chase Total Checking® $200 Cash Review
Chase SavingsSM $150 Cash Review
HSBC Premier Checking Member FDIC $450 Cash Review
HSBC Premier Checking Member FDIC Up To $600 Review
HSBC Advance Checking Member FDIC $200 Cash Review
HSBC Advance Checking Member FDIC Up To $240 Review
Huntington 25 Checking $500 Cash Review
Huntington 5 Checking $200 Cash Review
Huntington Asterisk-Free Checking $150 Cash Review
TD Bank Beyond Checking $300 Cash Review
TD Bank Convenience CheckingSM $150 Cash Review
Huntington Bank Unlimited Plus Business Checking $750 Cash Review
Huntington Bank Unlimited Business Checking $400 Cash Review
Huntington Bank Business Checking 100 $200 Cash Review
Axos Bank Basic Business Checking $100 Cash Review
Aspiration Spend & Save Account $100 Cash Review
American Express High Yield Savings 0.60% APY Review
CIT Bank Money Market 0.60% APY Review
Simple Up to 0.60% APY Review
Ally Invest Up to $3,500 Cash Review
E*TRADE $0 Commissions Review


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